Annual Report — Form 10-K Filing Table of Contents
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3: EX-10.52 Material Contract HTML 20K
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11: EX-23.1 Consent of Experts or Counsel HTML 9K
12: EX-23.2 Consent of Experts or Counsel HTML 10K
13: EX-31.1 Certification -- Sarbanes-Oxley Act - Sect. 302 HTML 16K
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15: EX-32.1 Certification -- Sarbanes-Oxley Act - Sect. 906 HTML 12K
This
STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as of February12, 2008 by and between the parties listed on the signature pages hereto as
Optionees ("Optionees"), and Rudolf Gunnerman and Doris Gunnerman, as joint
owners, the undersigned stockholders ("Stockholders") of Sulphco, Inc., a Nevada
corporation (the "Company").
BACKGROUND
A. Concurrently
with the execution of this Agreement, Optionees and Stockholder have entered
into that certain Stock Purchase Agreement of even date herewith (“SPA”),
pursuant to which Optionees are purchasing from Stockholders up to 2,000,000
shares of Common Stock of the Company.
B. Stockholders
are the beneficial owners (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of at least the amount
of
shares of outstanding common stock of the Company ("Shares” or “Securities”)
necessary to fulfill Stockholders’ obligations hereunder.
C. Capitalized
terms not otherwise defined herein shall have the meanings attributed to such
terms in the SPA.
NOW,
THEREFORE, in consideration of the execution and delivery by Optionees of the
Assignment and the mutual covenants, conditions and agreements herein contained,
and intending to be legally bound, the parties hereto hereby agree as
follows:
1.
Option.
(a) Subject
to the terms and conditions set forth in this Agreement, effective immediately,
the Stockholders hereby grant to Optionees an option (the "Option") to purchase
up to 2,000,000 Shares (“Option Shares”) from the Stockholders (for each
Optionee up to the Proportionate Amount set forth on the signature pages
hereof), at a per share purchase price equal to Four Dollars and Fifty Cents
($4.50) per share (the "Purchase Price").
(b) Simultaneously
with the execution of this Option Agreement, Stockholders will deliver 2,000,000
into escrow with Grushko & Mittman, P.C., as escrow agent (“Escrow Agent”),
pursuant to the form of escrow agreement attached hereto as Exhibit A. If at
any
time after the date of execution of this Agreement and during the term hereof,
Stockholders receive any further shares of stock due to a stock split, or
otherwise, with regard to the shares represented by Certificates, they shall
immediately deliver those shares into escrow with the Escrow Agent.
(c) The
Option may be exercised by an Optionee in whole or in part commencing on the
Closing Date and continuing through December 31, 2008. There may be up to five
exercises of the Option by each Optionee. At the time of each partial exercise
the Stockholders shall make a notation in their books and records as to the
remaining portion of the Option subject to exercise.
(d) This
Option may be exercised by each Optionee only up to the same number of shares
as
are purchased by such Optionee under the SPA.
(e) In
the
event that an Optionee wishes to exercise the Option, it shall send to the
Stockholders and Escrow Agent a written notice (the date of each such notice
being herein referred to as a "Notice Date") setting forth its irrevocable
election to that effect, which notice also specifies a date not earlier than
five (5) business days nor later than thirty (30) business days from the Notice
Date for the closing of such purchase (an "Option Closing Date"). The place
of
any Option Closing shall be at the offices of Grushko & Mittman, P.C. at 551
Fifth Avenue, Suite 1601, New York, NY10176, and the time of the Option Closing
shall be 10:00 a.m. (New York Time) on the Option Closing Date.
(f) At
the
Option Closing, an Optionee shall pay to the Stockholders by delivery to Escrow
Agent in immediately available funds by wire transfer to the bank account
designated in writing in the Escrow Agreement an amount equal to the Purchase
Price. The terms of the Escrow Agreement shall govern mechanics for release
of
stock and funds and related matters.
(g) At
the
Option Closing, upon delivery of immediately available funds as provided above,
the Escrow Agent shall deliver: (i) to the Optionee a certificate or
certificates representing the Option Shares to be purchased at such Option
Closing (or, a certificate endorsed in blank) and registered on the books and
records of the Company in Optionee’s name, which Securities shall be free and
clear of all liens, claims, charges and encumbrances of any kind whatsoever,
and
(ii) to Stockholders, the Purchase Price.
(h) In
the
event of any change in the Common Stock by reason of a stock dividend, split-up,
merger, recapitalization, combination, exchange of shares or similar
transaction, the type and number of Option Shares subject to the Option, and
the
Purchase Price therefor, shall be adjusted appropriately, so that Optionee
shall
receive upon exercise of the Option the number and class of shares or other
securities or property together with any additional shares delivered to the
Escrow Agent pursuant to Section 2(b) above that Optionee would have received
if
the Option had been exercised immediately prior to such event or the record
date
therefor, as applicable.
2.Termination.
The
right to exercise this Option shall terminate on December 31, 2008.
Notwithstanding the foregoing, if the Option cannot be exercised by reason
of
any applicable judgment, decree, order, law or regulation, the Option shall
remain exercisable and shall not terminate until the earlier of (x) the date
on
which such impediment shall become final and not subject to appeal, and (y)
5:00
p.m. New York Time, on the thirtieth (30th) business day after such impediment
shall have been removed. Notwithstanding the termination of the Option or this
Agreement, Optionees shall be entitled to purchase the Securities if it has
exercised the Option in accordance with the terms hereof prior to such
termination and such termination shall not affect any rights hereunder which
by
their terms do not terminate or expire prior to or as of such
termination.
2
3.Representations
and Warranties of the Stockholders.
The
Stockholders hereby represent and warrant to Optionees as follows:
(a)Due
Authorization; Enforceability.
The
Stockholders have full power and authority to execute and deliver this
Agreement. The execution and delivery of this Agreement and the consummation
of
the transactions contemplated hereby have been duly and validly authorized
by
all necessary action on the part of the Stockholders, and no other proceedings
on the part of the Stockholders are necessary to authorize this Agreement or
to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Stockholders and constitutes a valid
and binding agreement of the Stockholders, enforceable against such Stockholders
in accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and to general
principles of equity.
(b)Ownership
of Securities; Voting Rights.
The
Stockholders have sole voting power with respect to the Option Shares. The
Option Shares are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding to which the Stockholders
are a party restricting or otherwise relating to the voting, dividend rights
or
disposition of the Option Shares.
(c)No
Encumbrances.
Upon
the exercise of the Option and the delivery to an Optionee by Stockholders
of a
certificate or certificates, or other similar document, evidencing the Option
Shares, Optionee will receive good, valid and marketable title to the Shares,
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on Optionees’ voting rights,
charges and other encumbrances of any nature whatsoever (except any security
interest created by Optionees).
(d)No
Conflicts.
No
authorization, consent or approval of any court or any public body or authority
is necessary for the consummation by the Stockholders of the transactions
contemplated by this Agreement. The execution, delivery and performance of
this
Agreement by the Stockholders will not constitute a breach, violation or default
(or any event which, with notice or lapse of time or both, would constitute
a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien or encumbrance upon any of the properties
or
assets of such Stockholders under, any note, bond, mortgage, indenture, deed
of
trust, license, lease, agreement or other instrument to which such Stockholders
are a party or by which his or her properties or assets are bound, other than
breaches, violations, defaults, terminations, accelerations or creation of
liens
and encumbrances which, in the aggregate, would not materially impair the
ability of such Stockholders to perform his or her obligations
hereunder.
3
(e)Brokers.
No
broker, finder or investment banker is entitled to any brokerage, finder's
or
other fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of the Stockholders.
(f) Stockholders
were provided with the opportunity to present this Agreement and related
documentation to an attorney for review and have determined upon their own
free
will to not avail themselves of such right. They understand that the transaction
contemplated by this Assignment is a sophisticated business and financial
transaction, and they have the acumen and experience to review this Assignment
and related documentation and to enter into the transactions set forth in the
Assignment without the aid of counsel. They acknowledge that they have not
relied upon the advice, judgment or counsel of attorneys for either the Borrower
or Optionees and they waive any claims they may have against them arising out
of
this transaction
4.Representations
and Warranties of Optionees.
Each
Optionee represents warrants as follows:
(a)Compliance
with the Securities Act of 1933.
The
Optionee understands and agrees that the Option Shares have not been registered
under the Securities Act of 1933 (“1933 Act”) or any applicable state securities
laws, by reason of their issuance in a transaction that does not require
registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of Optionee contained herein), and that Option
Shares must be held indefinitely unless a subsequent disposition is registered
under the 1933 Act or any applicable state securities laws or is exempt from
such registration.
(b)Status
of Optionee.
The
Optionee is, and will be at the time of the exercise of the Option, an
"accredited
investor",
as
such term is defined in Regulation D promulgated by the Commission under the
1933 Act, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States publicly-owned companies in private placements in the past and, with
its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable the Optionee to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment. The Optionee has the authority and is
duly
and legally qualified to purchase and own the Option Shares. The Optionee is
able to bear the risk of such investment for an indefinite period and to afford
a complete loss thereof. The information set forth on the signature page hereto
regarding the Optionee is accurate.
(c)Restricted
Securities.
Optionee will not sell, offer to sell, assign, pledge, hypothecate or otherwise
transfer any of the Option Shares unless pursuant to an effective registration
statement under the 1933 Act, or unless an exemption from registration is
available.
(d) Upon
exercise of the Option in whole or in part, the Option Shares issued shall
bear
the following or similar legend:
4
"THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO SULPHCO, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
5.Stockholders
Covenants.
The
Stockholders hereby covenant and agree as follows:
(a) The
Stockholders hereby agree, while this Agreement is in effect, and except as
contemplated hereby, not to sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of (all of the foregoing, "Sell,""Sold" or
"Sale," as the case may be), any of the Option Shares.
(b) The
Stockholders agree not to engage in any action or omit to take any action which
would have the effect of preventing or disabling Stockholders from delivering
the Option Shares to Optionees or otherwise performing its obligations under
this Agreement.
(c) The
Stockholders are
responsible for making any filings required to be made by him with all
regulatory bodies arising from the transactions contemplated
hereby.
(d) Simultaneously
with the execution hereof, the Stockholders shall enter into and deliver the
Lockup Agreement attached hereto as Exhibit B.
6.Miscellaneous.
(a)Fees
and Expenses.
All
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the party incurring such
expenses.
(b)Amendment.
This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
(c)Choice
of Law and Venue; Jury Trial Waiver.
This
Assignment shall be governed by, and construed in accordance with, the internal
laws of the State of New York, without regard to principles of conflicts of
law.
STOCKHOLDERS,
COMPANY AND OPTIONEESWAIVE
ANY
RIGHT
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS ASSIGNMENT OR ANY TRANSACTION CONTEMPLATED HEREIN, INCLUDING CLAIMS BASED
ON CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER COMMON LAW OR STATUTORY BASES.
Each
party hereby
submits
to the exclusive jurisdiction of the state and federal courts located in the
County of New York, State of New York.
5
(d)Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
(e)Assignment;
Binding Effect; No Third Party Beneficiaries.
Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Any purported
assignment without the consent required pursuant to the preceding sentence
shall
be null and void. Subject to the second preceding sentence, this Agreement
(including, without limitation, the obligations of the Stockholders under
Section 1 and Section 2 hereof) shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing
in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Notwithstanding the foregoing, any Optionee may assign this agreement to one
or
more of its affiliates.
6
(f)Severability.
In the
event that any provision of this Agreement, or the application thereof, becomes
or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force
and
effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties. The
parties further agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
(g)Counterparts.
This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument. Each
counterpart may consist of a number of copies hereof each signed by less than
all, but together signed by all of the parties hereto.
(h)Further
Assurances.
Each
party hereto shall perform such further acts and execute such further documents
as may reasonably be required to carry out the provisions of this
Agreement.
[Balance
of Page Intentionally Left Blank]
7
IN
WITNESS WHEREOF, the undersigned have executed this Agreement on the
date
first above written.
RUDOLF
GUNNERMAN
“Stockholder”
____________________________________________
DORIS
GUNNERMAN
“Stockholder”
____________________________________________
[SIGNATURE
PAGE TO STOCK OPTION AGREEMENT]
8
[OPTIONEE
SIGNATURE PAGES TO STOCK OPTION AGREEMENTS]
IN
WITNESS WHEREOF the undersigned have executed this Stock Option Agreement as
of
the first date above written.
Name
of
Optionee: Iroquois
Master Fund Ltd.
Signature
of Authorized Signatory of Optionee:
_______________________________________
Name
of
Authorized Signatory:
____________________________________________________
Title
of
Authorized Signatory:
_____________________________________________________
